Riskiness of portfolios b/w riskiness of individual asset, Financial Management

Why does the riskiness of portfolios have to be looked at differently than the riskiness of individual assets?

The riskiness of portfolios has to be seemed to be at differently than the riskiness of individual assets for the reason that the weighted average of the standard deviations of returns of individual assets doesn't result in the standard deviation of a portfolio containing the assets.  There is a reduction in the dissimilarities of the returns of portfolios which is called the diversification effect.

 

 

Posted Date: 6/17/2013 2:20:55 AM | Location : United States







Related Discussions:- Riskiness of portfolios b/w riskiness of individual asset, Assignment Help, Ask Question on Riskiness of portfolios b/w riskiness of individual asset, Get Answer, Expert's Help, Riskiness of portfolios b/w riskiness of individual asset Discussions

Write discussion on Riskiness of portfolios b/w riskiness of individual asset
Your posts are moderated
Related Questions
Principal repayment before the scheduled date is called a prepayment. Every individual borrower normally has the option to pay off all or part of their loan

Q. What are the misstatements? A Misstatement is Inconsequential - If a reasonable person would determine after considering the possibility of further undetected misstatement

Offshore Financial Center It is a location with banking facilities to accept deposits and make loans in currencies various from the currency's country of origin. Banks located

Cash Flow Valuation Technique The aim of this research is to empirically enquire into how to value a company using discounted cash flow valuation technique within its real lif

Reinvestment risk is the risk involved in reinvesting the proceeds received from the issuer against callable bonds. During falling interest rate periods, investor canno

Explain the factors affecting the choice of a maximum cash balance amount. The maximum cash balance amount is defined by available investment opportunities, the expected return o

In addition to the public pension plans, Rob and Ellen also have RRSPs.  What options will they have when they retire if they want to draw money from their RRSPs?  Identify one str

Consider a world with two assets: a riskless asset paying a zero interest rate, and a risky asset whose return r can take values +10% or -8% with equal probability. An individual h

An average should be: (a) vigorously defined, (b) easy to compute, (c) capable of simple interpretation, (d) dependent on all the observed values, (e) not unduly influenced by one

The secondary market is a market where the investor purchases a security from another investor rather than from the issuing corporation. This market is secondary